Personal Wealth Partners, LLC v. Ryberg et al

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Personal Wealth Partners, LLC, 	Case No. 21-cv-2722 (WMW/DTS)
Plaintiff,
ORDER
v.
Gary Dean Ryberg and Kestra Investment
Services, LLC,
Defendants.
Before the Court are Defendants Gary Dean Ryberg and Kestra Investment
Services, LLC’s (Kestra) motions to dismiss Plaintiff Personal Wealth Partners, LLC’s
(PWP) complaint. 	(Dkts. 28, 30.) 	For the reasons addressed below, the Court grants
Ryberg’s motion to dismiss for improper venue and transfers the action to the United
States District Court for the District of North Dakota.
BACKGROUND
PWP is a Minnesota limited liability company that provides investment advice to
its clients. 	PWP employed Ryberg, a North Dakota resident, between January 2016 and
November 2021. Kestra is a Texas limited liability company.
PWP hired Ryberg to serve its clients in PWP’s Williston, North Dakota office.
PWP alleges that it required Ryberg to enter into an agreement (the Agreement) to keep
certain categories of information, including PWP’s client data, confidential. 	PWP
assigned Ryberg approximately 325 of its clients and provided Ryberg access to all of its
client records and information.
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Ryberg resigned in November 2021. PWP alleges that Ryberg began employment
with Kestra on the day of Ryberg’s resignation from PWP and that Ryberg encouraged
PWP clients to transfer their accounts to him at Kestra. PWP alleges that it has lost 115
of its client accounts and 30 percent of its investment assets to Kestra.
PWP commenced this action in December 2021, advancing ten claims to relief,
including breach of contract, breach of the duty of loyalty, breach of the duty of
confidentiality, tortious interference with contract, tortious interference with prospective
business relationships, violations of the Minnesota Trade Secrets Act, misappropriation
of trade secrets, and unfair competition. 	PWP moved for a preliminary injunction and
temporary restraining order, which the Court denied on January 18, 2022. 	Ryberg now
moves to transfer venue or, in the alternative, to dismiss, pursuant to Federal Rules of
Civil Procedure 12(b)(3) and 12(b)(6). 	Kestra moves to dismiss pursuant to Federal
Rules of Civil Procedure 12(b)(2) and 12(b)(6).
ANALYSIS
Ryberg argues that the District of Minnesota is not the proper venue for this action
and seeks dismissal under Federal Rule of Civil Procedure 12(b)(3). 	The federal venue
statute provides, in relevant part:
A civil action may be brought in—
(1) a judicial district in which any defendant resides, if
all defendants are residents of the State in which the
district is located;
(2) a judicial district in which a substantial part of the
events or omissions giving rise to the claim occurred,
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or a substantial part of property that is the subject of
the action is situated; or
(3) if there is no district in which an action may
otherwise be brought as provided in this section, any
judicial district in which any defendant is subject to the
court’s personal jurisdiction with respect to such action.
28 U.S.C. § 1391(b). 	When a party challenges a plaintiff’s choice of venue, a district
court must first determine whether the case falls within one of these three categories. Atl.
Marine Constr. Co. v. U.S. Dist. C. for the W. Dist. of Tex., 571 U.S. 49, 56 (2013).
Whether the parties entered into an agreement that includes a forum-selection clause has
no bearing on this threshold question. Id.
Section 1391(b)(1) provides that venue is proper in a judicial district in which any
defendant resides, if all defendants reside in the state in which the district is located. 	28
U.S.C. § 1391(b)(1). 	As relevant to the venue question at issue here, the statute defines
residency as follows:
(1) 	a natural person, including an alien lawfully admitted
for permanent residence in the United States, shall be deemed
to reside in the judicial district in which that person is
domiciled; [and]
(2) 	an entity with the capacity to sue and be sued in its
common 	name 	under 	applicable 	law, 	whether 	or 	not
incorporated, shall be deemed to reside, if a defendant, in any
judicial district in which such defendant is subject to the
court’s personal jurisdiction with respect to the civil action in
question and, if a plaintiff, only in the judicial district in
which it maintains its principal place of business[.]
28 U.S.C. § 1391(c). 	At the April 21, 2022 hearing on Defendants’ motions to dismiss,
PWP argued that venue in this District is proper because the Court has personal
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jurisdiction 	over 	Defendants. 	PWP 	relied 	on 	Dakota 	Industries, 	Inc. 	v. 	Dakota
Sportswear, Inc., in which the United States Court of Appeals for the Eighth Circuit held
that “[i]f personal jurisdiction exists at the commencement of the action, then venue is
proper under 28 U.S.C. § 1391(b).” 	946 F.2d 1384, 1392 (8th Cir. 1991). 	But Dakota
Industries is inapposite here. In Dakota Industries, the court relied on Section 1391(c) to
conclude that venue was proper because the court had personal jurisdiction over the
defendant corporation. 	Id. 	But Section 1391(c)(2) is applicable to only “an entity with
the capacity to sue and be sued.” Natural persons, on the other hand, “shall be deemed to
reside in the judicial district in which that person is domiciled.” 28 U.S.C. § 1391(c)(1).
Ryberg is a natural person, not an entity. And it is undisputed that Ryberg is domiciled in
North Dakota. Section 1391(b)(1) applies only if all defendants are residents of the state
in which the judicial district is located. 	Because Ryberg is not a resident of Minnesota,
venue is not proper in the District of Minnesota under Section 1391(b)(1).
Venue also is not proper in the District of Minnesota under Section 1391(b)(3)
because, as addressed below, this action may be brought properly in North Dakota. 	See
Atl. Marine, 571 U.S. at 56–57 (observing that Section 1391(b)(3) is “a fallback option”
that applies only if “no other venue is proper”). 	Accordingly, the Court considers
whether venue is proper in the District of Minnesota under Section 1391(b)(2).
It is a defendant’s burden to establish that the plaintiff’s chosen venue lacks a
sufficient connection to the parties’ dispute. 	United States v. Orshek, 164 F.2d 741, 742
(8th Cir. 1947). 	A court may consider matters beyond the pleadings when ruling on a
motion to dismiss for improper venue. See, e.g., Advanced Logistics Consulting, Inc. v. C.
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Enyeart LLC, No. 09-720 (RHK/JJG), 2009 WL 1684428, at *2 (D. Minn. June 16, 2009).
When determining whether venue is proper under Section 1391(b)(2), a district court
considers whether the plaintiff has chosen a venue that has a substantial connection to the
plaintiff’s claims regardless of whether another forum has a more substantial connection.
Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 563 (8th Cir. 2003). 	Also, when
determining whether venue is proper, a court need not “only consider the defendant’s
allegedly wrongful activities,” but the court’s “focus must be on relevant activities of the
defendant in the forum state.” Steen v. Murray, 770 F.3d 698, 703 (8th Cir. 2014).
Ryberg worked in PWP’s office in Williston, North Dakota. 	Of Ryberg’s 525
clients, only five may have lived in Minnesota at some point in time, and Ryberg attests
that he had little contact with those clients after they moved to Minnesota. 	Ryberg did
not solicit clients in Minnesota, and he accessed all client information from Williston,
North Dakota. 	Ryberg attended one work-related meeting in Minnesota in addition to
two PWP holiday parties. 	Ryberg’s connections to Minnesota consist of receiving a
salary and benefits from PWP, a Minnesota company, for more than five years, attending
two holiday parties and one meeting in Minnesota, servicing five or fewer Minnesota
clients, and sending a resignation letter to Minnesota. Importantly, these contacts do not
constitute a substantial part of the events or omissions giving rise to PWP’s claims
against Ryberg. Instead, PWP’s claims stem from allegations that Ryberg, while working
in North Dakota, transferred confidential information and clients, most of whom lived in
North Dakota, from PWP to Kestra, a North Dakota company.
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PWP 	contends 	that 	“[a]lmost 	everything 	giving 	rise 	to” 	Ryberg’s 	alleged
misconduct “flowed through and involved Minnesota.” 	But the Court’s analysis must
focus on the “relevant activities of the defendant in the forum state, not on the effect of
those activities on the plaintiff in the forum state.” 	Id. 	And although Ryberg’s actions
impacted PWP in Minnesota, the record reflects that the events underlying PWP’s claims
took place in North Dakota.
For these reasons, Ryberg has met his burden to establish that Minnesota lacks
sufficient connection to the dispute because “a substantial part of the events or omissions
giving 	rise 	to 	the 	claim 	occurred” 	in 	North 	Dakota, 	not 	Minnesota. 	28 	U.S.C.
§ 1391(b)(2). 	When venue is improper, a district court may transfer the case in the
interests of justice to any district or division in which the case could have been brought.
28 U.S.C. § 1406(a). Because a substantial part of the events or omissions giving rise to
the claim occurred in North Dakota, the Court grants Ryberg’s motion to transfer venue
and transfers the case to the United States District Court for the District of North Dakota.
In light of the Court’s decision to grant Ryberg’s motion to transfer venue, the Court
declines to consider Kestra’s motion to dismiss or Ryberg’s alternative arguments for
dismissal under Federal Rule of Civil Procedure 12(b)(6).
ORDER
Based on the foregoing analysis and all the files, records and proceedings herein,
IT IS HEREBY ORDERED:
1. 	Defendant Gary Dean Ryberg’s motion to transfer venue, (Dkt. 28), is
GRANTED as addressed herein.
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2. 	The Clerk of Court is directed to TRANSFER this action to the United
States District Court for the District of North Dakota.
Dated: August 26, 2022 	s/Wilhelmina M. Wright
Wilhelmina M. Wright
United States District Judge
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